An Advocacy Group for Startups Is Funded by Google and Run …

May 30, 2018 by admin

Engine argues that it has demonstrated its independence by breaking with Google on policy multiple times, most notably during the 2014 fight over net neutrality. Engine endorsed reclassifying broadband under Title II of the Communications Act; Google was more muted, and its trade group the Internet Association refused to endorse Title II. Other issues Engine highlights have no relevance to Google, like capital formation for early-stage companies. “Engine makes policy decisions based entirely in the best interests of, and the feedback we receive from, startups in our network, not the positions of our funders,” said executive director Evan Engstrom.

However, Engine has been less vocal about one of the tech startup community’s most existential threats: persistent acquisitions by big companies to wall off competition, especially Google (as a recent “60 Minutes” report pointed out). Each merger cements Big Tech’s dominance and makes it more difficult for innovative challengers to get oxygen. Those not scooped up face competition described as “merciless” and “sometimes unfair”; witness Facebook copying Snapchat’s applications and distributing them to its vast network. University of Maryland economist John Haltiwanger attributes a 13-year decline of tech startups to Big Tech, stating, “The large companies are engaged in defensive innovation.”

The ties between Google and Engine, a subject of whispers among the D.C. lobbying community for a while, reveal another way that Silicon Valley titans wield influence in Washington. In addition to direct lobbying, Google uses its prodigious war chest to fund think tanks, academic research, and “grassroots” groups, which then offer what can look to the uninitiated like independent viewpoints. The opinions and recommendations happen to line up with Google’s positions. “Engine is an example of a D.C. organization that is good for the cause” of Google, said Jason Kint, CEO of Digital Content Next, a trade organization for online publishers.

At a time when Big Tech is experiencing backlash over its size, power, and carelessness with user information, having a coalition of small entrepreneurs like Engine take the lead in political lobbying campaigns makes sense, in the same way that Wall Street uses community banks as a shield to promote bank-friendly policies. “Saying ‘this will hurt Google and Amazon’ — that’s not going to get you far,” said Rick Lane, a former lobbyist for 21st Century Fox and the U.S. Chamber of Commerce, who recently assisted activists fighting Google on Section 230 changes. “Saying ‘this will hurt startups’ — that can.”

Engine’s links to Google go back to its founding. “Engine Advocacy wants to give Silicon Valley startups a voice in Washington,” wrote Business Insider in December 2011, directly contrasting the group with the big money afforded telecom and tech behemoths like Verizon, AT&T, Microsoft, and Google.

The Business Insider story highlights a December 8, 2011 Engine kickoff party in San Francisco. But an email invitation to that event suggests that a Google employee set it up. “Derek Slater who used to be at the EFF but is now policy director at Google (maybe you know him?) is starting to pursue the big and exciting project of a new political advocacy org, Engine Advocacy,” reads the email, which asks that RSVPs go to the work email address of another Google employee.

Image: Campaign for Accountability; Screenshot: The Intercept

Emails to the Google employee named in the RSVP were not returned.

Slater also promoted the Engine launch on Google+, writing, “If you’re at a tech startup, or you support startups some other way (e.g., investor, freelance designer), you need to be part of Engine Advocacy.” Google co-founder Sergey Brin also promoted Engine shortly after its launch date.

Engine responded that Slater was not a founder, never had a formal role with the group, and merely helped get it off the ground. But all three Engine’s founders — Luis Arbulu, Joshua To, and Joshua Mendelsohn — are former Google employees. To registered the domain name EngineAdvocacy.com and the current website Engine.is shortly after leaving Google. Mendelsohn was referred to as “tech startups’ Washington lobbyist” in news reports.

At the time of Engine’s launch, the founders ran a startup incubator called Hattery; Engine was initially housed in the same office. Mike McGeary, Engine’s political strategist, had his salary paid for by Hattery. Then, Google bought Hattery in summer 2013, hiring most of its employees; the advocacy and communications team went to Engine. To returned to Google that year. Engine says that Google never directly paid the salary of any Engine staffer. Mendelsohn’s new venture, a company called Hangar, did not make him available for comment.

Engine is not a membership organization that requires dues. “Members” simply self-identify, initially through “an internet form that was circulated by Google and Engine,” according to the Campaign for Accountability report. There is a membership list, which includes companies that would be hard-pressed to call themselves startups at this point, like Google, Facebook, Twitter, Netflix, Uber, and LinkedIn, a subsidiary of Microsoft. Engine says that list is an artifact of an old iteration of the website and is not reachable from its homepage.

On its public policy page, Google lists Engine among the hundreds of third-party organizations it funds. The Campaign for Accountability report says Google has acknowledged funding Engine every year since 2013, though it never details the amounts. Similarly, while Engine Advocacy, a 501(c)(4) nonprofit, and Engine Research Foundation, its 501(c)(3) companion, reported $4.4 million in funding between 2013 and 2015, it does not detail where those contributions came from and how much was from Google.

Engine did name other companies from which it has received funding, including Apple, Facebook, T-Mobile, Sprint, Etsy, and Bloomberg, as well as foundations as diverse as the Koch Foundation and the Knight Foundation. “We are proud of the funding that we have received from philanthropic organizations and companies both large and small, including Google,” Engstrom said. Engine would not provide exact figures or name all funders.

Another funder mentioned was Yelp, one of Google’s most vociferous critics, which just last week filed a complaint against Google in the European Union alleging bias in its local search results. “We’re technically members [of Engine], but I don’t think we’ve given them money in a while,” said Luther Lowe, senior vice president for public policy at Yelp.

Peter Pappas, a senior adviser to Engine on intellectual property, advises Google on patent issues. His government relations firm, Innovation Strategies, lists both Google and Engine as clients. Similarly, the S-3 Group, a registered lobbying firm, has worked for both Engine and Google, according to congressional lobbying disclosures.

Another advisory board member is Hunter Walk, an ex-Google employee who lists among his experience “acquiring start-ups (@Google).” Advisory board member Brad Feld is a venture capitalist with the Foundry Group who invested in AdMeld and Revolv, startups acquired by Google, and co-invested in companies like Yesware and Trada alongside Google Ventures, Google’s VC subsidiary.

Engstrom came from Farella Braun + Martel, an IP law firm that has Google among its clients. Engstrom did not work on any case with Google as a client, Engine pointed out.

A display for Engine even found its way into the Google booth at the 2012 Republican and Democratic national conventions. An art director named Michelle Brook who worked on the project noted it on her personal website, writing, “Engine works in partnership with Google to advocate for public policies that foster innovation and entrepreneurship.”

The report cites several issue areas where Engine’s and Google’s interests have “dovetailed.” This includes the campaign to prevent stringent anti-piracy legislation in 2011 and 2012, the time of Engine’s founding. The group also organized a letter to Congress for patent reform right when Google faced litigation threats on its patents. Google and Engine also share an interest in opening up more broadband spectrum and increasing visas for high-skilled immigrants, the paper states.

Google highlighted on its blog an Engine research paper on the importance of high-tech jobs to the U.S. economy in 2012. The following year, Engine issued a separate report from European researchers at KU Leuven touting the EU high-tech sector. On the cover page, the authors “thank Google for providing funding for this report.”

Engstrom denied a direct policy alignment between Engine and Google. “We have shown that we have no fear in departing from strongly held donor positions, in policy debates big and small, when we felt the startup ecosystem’s interests could be better served otherwise,” he said

The most recent example of Engine allegedly furthering Google’s interests came during the fight over online sex trafficking legislation known as SESTA, or the Stop Enabling Sex Traffickers Act. Google opposed SESTA because it would represent the first alteration to Section 230, a gold-standard provision that exempts websites from liability for actions by its users. Supporters said SESTA was narrowly targeted and necessary to prevent sex trafficking from proliferating online.

“Google was lobbying, but they did not want to be the public face,” said Rick Lane, who worked with activists during the SESTA debate. “They put out CDT (Center for Democracy and Technology), EFF (Electronic Frontier Foundation), TechFreedom, and Engine.” All have received support from Google.

Mary Mazzio, the filmmaker behind “I Am Jane Doe“ who led efforts on the anti-sex trafficking bill, said that Engine was “very, very active” during the SESTA fight. Engine’s emphasis on Section 230’s importance to small startups did resonate with certain lawmakers, like Sens. Ed Markey, D-Mass., and Ron Wyden, D-Ore. Last November, Wyden released a statement, saying that SESTA “will favor big tech companies at the expense of startups and that it will stifle innovation,” a mirror of Engine’s talking points on the issue.

“I would say Engine appeared to be a puppet with Google being the puppeteer,” Mazzio said. “It’s brilliant as a strategy. [Google’s] the big, bad wolf, and we’re funding [startup] groups that say the big, bad wolf is going to eat us. It’s Machiavellian.”

Ultimately, the impression of covering for sex trafficking proved too great for Engine or Google to overcome, and SESTA passed into law. That, and the fact that the bloom is off the rose of the tech industry, which no longer gets a free pass in Washington. Even Markey, who didn’t co-sponsor the bill, ended up voting for it; Wyden was one of only two senators who opposed.

Engine continues to support initiatives that align with Google. It has criticized an impending California ballot measure to safeguard consumer privacy as “poorly written” and “overly broad.” Google has been funding opposition to the ballot measure, even after Facebook dropped its objections amid criticism.

“Google’s apparent creation and support for Engine is a key indication of the how company uses its wealth to achieve its goals in Washington while hiding behind the curtain,” the report concludes.

Both Engine and Google highlighted the Campaign for Accountability’s ties to Oracle, referring to a wild and highly charged eight-year lawsuit over whether Google violated Oracle’s patents when it built the Android operating system. The highly technical case seems at this point more like an excuse for a slap fight between the two Silicon Valley rivals.

“This bizarre report, funded by Oracle, is an attempt to undermine the work that Engine does on behalf of the startup community to advance Oracle’s unrelated long-running dispute with Google,” said Engstrom.

Update: May 30, 2018

This story was updated to include a statement from Oracle.

Top photo: Google’s headquarters in Mountain View, Calif., on April 21, 2018.